The ITO, Ward-1,, GANDHIDHAM v. M/s Indrajmal Motilal & Sons (Exports) P. Ltd.,, GANDHIDHAM

ITA 990/RJT/2009 | 2001-2002
Pronouncement Date: 25-02-2011 | Result: Dismissed

Appeal Details

RSA Number 99024914 RSA 2009
Assessee PAN AAACI8347K
Bench Rajkot
Appeal Number ITA 990/RJT/2009
Duration Of Justice 1 year(s) 5 month(s) 2 day(s)
Appellant The ITO, Ward-1,, GANDHIDHAM
Respondent M/s Indrajmal Motilal & Sons (Exports) P. Ltd.,, GANDHIDHAM
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 25-02-2011
Date Of Final Hearing 28-12-2010
Next Hearing Date 28-12-2010
Assessment Year 2001-2002
Appeal Filed On 23-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.990/RJT/2009 (ASSESSMENT YEAR 2001-02) ITO WD.1 VS M/S INDRAJMAL MOTILAL & SONS GANDHIDHAM (EXPORTS) P LTD 317-PLAZA CENTRE PLOT NO.117 SECTOR 8 GANDHIDHAM-KUTCH PAN : AAACI8347K (APPELLANT) (RESPONDENT) C.O. NO. 57/RJT/2010 (ARISING OUT OF I.T.A. NO.990/RJT/2009) (ASSESSMENT YEAR 2001-02) M/S INDRAJMAL MOTILAL & SONS VS ITO WD.1 (EXPORTS) P LTD GANDHIDHAM-KUTCH GANDHIDHAM (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI AVINASH KUMAR ASSESSEE BY : SHRI MP SARDA O R D E R PER AL GEHLOT AM BY THIS APPEAL FILED AGAINST THE ORDER OF CIT(A)-I I RAJKOT DATED 06-07-2009 FOR THE ASSESSMENT YEAR 2001-02 THE REVENUE RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1. THE LD.CIT(A)-II HAS ERRED IN LAW AND ON FACT O F THE CASE IN DELETING THE ADDITION OF RS.95 000/- OUT OF RS.1 10 000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 2. THE LD.CIT(A)-II HAS ERRED IN LAW AND ON FACT OF THE CASE IN DELETING THE ADDITION OF RS.5 62 287/- OUT OF RS.12 00 465/- MADE ON ACCOUNT OF GROSS PROFIT ADDITION. 2. THE ASSESSEE IN ITS CROSS OBJECTION HAS RAISED THE FOLLOWING GROUNDS: ITA NO.990/RJT/2009 CO NO. 57/RJT/2010 2 1. THE LD.CIT(A) HAS ERRED IN NOT APPRECIATING THE APPELLANTS REQUEST OF :- PRODUCING BOOKS OF ACCOUNTS BILLS VOUCHERS BEFOR E CIT(A) AND PRODUCING THE SAME BEFORE THE A.O. IN THE REMAND PROCEEDINGS. 2. THE LD.CIT(A) HAS ERRED IN ESTIMATING THE G.P. @ 6.5% WITHOUT ANY VALID BASIS AND THEREBY CONFIRMING ADDITION OF RS.6 38 178/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF TIMBER TRADING AND SAWING OF TIMBER LOGS. THIS IS SECOND ROUND OF APPEAL BEFORE THE TRIBUNAL. IN THE EARLIER ROUND O F LITIGATION IN RESPECT OF ADDITION OF RS.1 10 000 U/S 68 AND ADDITION OF RS.12 00 465 ON ACCOUNT OF GROSS PROFIT THE MATTER REACHED UPTO THE ITAT AND THE ITAT VIDE ITA NO.1543/RJT/2005 ORDER DATED 24-01-2008 SENT BACK THE MATTER TO THE FILE O F THE ASSESSING OFFICER TO DECIDE THE ISSUES AFRESH. THE ASSESSING OFFICER RE PEATED BOTH THE ADDITIONS IN THE FRESH ASSESSMENT PROCEEDINGS VIDE ORDER DATED 2 1-11-2008 AS THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT AND OTHER DETAILS. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER DID N OT PROVIDE REASONABLE OPPORTUNITY OF HEARING. THE CIT(A) REJECTED THE AS SESSEES CONTENTION BY OBSERVING THE ASSESSEE DID NOT APPEAR BEFORE THE AS SESSING OFFICER IN SPITE OF REASONABLE OPPORTUNITY OF HEARING WAS PROVIDED. IT WAS ALSO OBSERVED THAT THE ASSESSEE WAS NOT SERIOUS ENOUGH IN PRODUCING THE BO OKS AND DEFENDING ITS CASE. THE CIT(A) WHILE DECIDING THE GROUND RELATING TO TH E ADDITION OF RS.1 10 000 ON ACCOUNT OF CASH CREDIT NOTED THAT THERE WAS OPENING BALANCE OF RS.95 000 WHICH COULD NOT BE ADDED U/S 68. THE CIT(A) ACCORDINGLY DELETED THE ADDITION OF RS.95 000 AND CONFIRMED THE BALANCE OF RS.15 000 ON THE GROUND THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS PRIMARY ONUS O F PROVING THE CASH CREDIT. THE ASSESSEE DID NOT FILE ANY MATERIAL EXCEPT COPY OF A CCOUNT. 4. THE CIT(A) WHILE DECIDING THE GROUND RELATING TO GROSS PROFIT ADDITION OBSERVED AFTER CONSIDERING ASSESSEES SUBMISSION A ND EARLIER ITAT ORDER THAT ITA NO.990/RJT/2009 CO NO. 57/RJT/2010 3 FOR ESTIMATING THE INCOME PAST RESULT OF THE ASSESS EE CANNOT BE IGNORED. HE FURTHER OBSERVED THAT IN THE ABSENCE OF ANY COMPLIA NCE BY THE ASSESSEE THE ISSUE IS REQUIRED TO BE RESOLVED BY PROPER ESTIMATI ON OF GROSS PROFIT. IN PRECEDING YEAR THE ASSESSEE HAS SHOWN GROSS PROFIT AT 4.5% O N TURNOVER OF RS.206 LAKHS WHEREAS THE CURRENT YEARS G.P. DECLARED 4.65% AND TURNOVER WAS RS.345 LAKHS WHICH WAS MUCH HIGHER THAN THE PRECEDING YEAR. IT HAS ALSO BEEN OBSERVED BY THE CIT(A) THAT GROSS PROFIT IN THE INSTANT CASE WO ULD BE HIGHER THAN THE PRECEDING YEAR AS IN SUCH CASES FIXED EXPENSES WOUL D NOT AFFECT THE GROSS PROFIT RATE. THE CIT(A) ACCORDINGLY ESTIMATED THE GROSS P ROFIT AT 6.5% AND ALLOWED RELIEF OF RS.5 62 287 AND CONFIRMED THE ADDITION TO THE EXTENT OF RS.6 38 178. 4. THE REVENUE IS IN APPEAL AGAINST THE DELETION OF RS.95 000 BY THE CIT(A) U/S 68 AND DELETION OF ADDITION OF RS.5 62 287 OUT OF GROSS PROFIT ADDITION. THE ASSESSEE IS IN CROSS OBJECTION ON THE GROUND THAT T HE CIT(A) DID NOT APPRECIATE THE ASSESSEES REQUEST FOR PRODUCING THE BOOKS OF A CCOUNT VOUCHERS AND AGAINST THE ESTIMATION OF GROSS PROFIT AT 6.5%. 5. WE HAVE HEARD THE LEARNED REPRESENTATIVE OF THE PARTIES AND HAVE PERUSED THE RECORD. IN THE FIRST ROUND OF LITIGATI ON IN RESPECT OF GROSS PROFIT ADDITION IT WAS CONTENDED AND NOTED BY THE ITAT AT PARAGRAPH 16 OF ITS ORDER THAT THE ASSESSEE MAINTAINED DAY TO DAY STOCK REGISTER A ND PRODUCED BEFORE THE ASSESSING OFFICER WHEREAS THE ASSESSING OFFICER STA TED THAT NO SUCH REGISTER WAS MAINTAINED. IT IS TO NOTE THAT IN THE SECOND ROUND OF LITIGATION THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT AND SO-CALLED STOCK RE GISTER NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE THE CIT(A). THE ITAT HAS ALSO NOTED IN THE SAID PARAGRAPH THAT IF OTHER PERSONS IN THE TRADE WERE D ECLARING BETTER PROFIT RATE THAT COULD NOT HAVE BEEN A REASON TO APPLY HIGHER PROFIT RATE IN THIS CASE. IN ANY EVENT THE MATERIAL WAS AVAILABLE WHICH NEEDED ENQU IRY INTO THE FACTS BEFORE ANY SATISFACTION COULD BE REACHED AS TO WHETHER THE ACC OUNTS ARE CORRECT OR COMPLETE. ON PERUSAL OF IMPUGNED ORDERS OF SECOND ROUND OF LITIGATION WE FIND THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCO UNT IN SPITE OF SUFFICIENT ITA NO.990/RJT/2009 CO NO. 57/RJT/2010 4 OPPORTUNITY PROVIDED. UNDER THE CIRCUMSTANCES WE FIND THAT IT IS A CASE WHERE BOOKS OF ACCOUNT HAS BEEN RIGHTLY REJECTED AND THE PROFIT HAS BEEN ESTIMATED. THE CIT(A) WHILE DECIDING THIS ISSUE HAS ALSO CONSI DERED THE COMPARATIVE GROSS PROFIT NOTED BY THE ASSESSING OFFICER. THE CIT(A) HAS ALSO CONSIDERED THE COMPARATIVE GROSS PROFIT POSITION OF THE ASSESSEE F OR THE EARLIER YEARS. AFTER CONSIDERING THE TOTALITY OF THE FACTS WE FIND THAT IT IS A CASE OF ESTIMATION OF FAIR AND REASONABLE PROFIT. THE ASSESSEE HAS SHOWN GROS S PROFIT AT 4.5% IN EARLIER YEAR. IN THE YEAR UNDER ACCOUNT THE ASSESSEE HAS NOT PRODUCE THE BOOKS OF ACCOUNT STOCK REGISTER AND OTHER RELEVANT DOCUMENT S. SO TO COVER UP THIS DEFICIENCY IT WOULD BE FAIR AND REASONABLE TO ESTIM ATE THE GROSS PROFIT AT 5% INSTEAD OF GROSS PROFIT AT 6.5% ADOPTED BY THE CIT( A) KEEPING IN MIND THE NATURE OF BUSINESS AND TURNOVER OVER ACHIEVED DURING THE Y EAR. ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO ADOPT THE GROSS PROFIT AT 5%. 6. WITH REGARD TO THE ISSUE OF DELETION OF ADDITION OF RS.95 000 OUT OF CASH CREDIT ADDITION OF RS.1 10 000 WE FIND THAT THE CIT (A) HAS GIVEN A FINDING THAT THIS AMOUNT PERTAINED TO EARLIER YEAR AND THIS FACT HAS NOT BEEN DISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. UNDER THE CIR CUMSTANCES WE ARE OF THE OPINION THAT THE CASH CREDIT PERTAINING TO THE EARL IER YEAR CANNOT BE ADDED U/S 68 IN THE YEAR UNDER CONSIDERATION. AN ADDITION OF RS .15 000 IS SUSTAINED BY THE CIT(A) FOR WHICH THE ASSESSEE DID NOT FURNISH ANY M ATERIAL. IN VIEW OF THESE REASONS WE DO NOT SEE ANY INFIRMITY IN THE ORDER O F THE CIT(A). THE GROUND OF THE REVENUE FAILS. 7. ONE OF THE GROUNDS RAISED IN THE CROSS OBJECTION PERTAINS TO NON GRANT OF OPPORTUNITY OF HEARING. WE HOWEVER FIND THAT THE ASSESSING OFFICER AND THE CIT(A) HAS PROVIDED SUFFICIENT AND REASONABLE OPPOR TUNITY OF HEARING AND THE ASSESSEE DID NOT POINT OUT ANY COGENT MATERIAL BASE D ON WHICH IT CAN BE SAID THAT THERE WAS LACK OF OPPORTUNITY. WE THEREFORE FIND THAT THE CIT(A) HAS RIGHTLY REJECTED THE REQUEST OF THE ASSESSEE. ITA NO.990/RJT/2009 CO NO. 57/RJT/2010 5 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25-02-2011. SD/- SD/- (N.R.S. GANESAN) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT DT : 25 TH FEBRUARY 2011 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-II RAJKOT 4. THE CIT-I RAJKOT 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT